State saves 58 million year free software?

No, the claim that a state saves 58 million per year by using free software is not a verified, universal fact; it is a specific figure that has appeared in various contexts, often tied to a particular government’s migration to open-source solutions, but no single official, audited number applies to all states or all years. This article explains what such savings claims are based on, how they are calculated, and why the actual figure varies wildly depending on the jurisdiction, the software being replaced, and the accounting method used.

Formula

The calculator estimates annual savings from switching to free (open-source) software using a simple linear model:

Savings = Current Annual License Cost × (Percentage Reduction / 100)

Where:

• Current Annual License Cost (t) – the total annual spending on proprietary software licenses, in USD.
• Percentage Reduction (p) – the share of that cost that is eliminated by moving to free software, in percent.

The new cost is simply the remainder: New Cost = Current Cost − Savings.

Worked Example

Using the default values from the calculator (t = 58,000,000 USD, p = 70%):

1. Convert the percentage to a decimal: 70 / 100 = 0.70.
2. Multiply the current cost by the decimal: 58,000,000 × 0.70 = 40,600,000 USD.
3. So the estimated annual savings = 40,600,000 USD.
4. The new annual cost = 58,000,000 − 40,600,000 = 17,400,000 USD.

The calculator shows the same result: savings of 40.6 million USD per year, with a remaining cost of 17.4 million USD.

Where the 58 Million Figure Comes From

The number “58 million� has been cited in news reports and government documents, most notably in connection with the city of Munich’s early switch to Linux, or with national-level migrations in countries like France or Germany. However, those reports are often based on internal estimates, not audited public accounts. For example, a 2012 study by the German state of Baden-Württemberg estimated savings of around €50 million over five years from using open-source software, which works out to roughly €10 million per year—not 58 million. In other cases, the number may refer to the total cost of proprietary licenses avoided, not the net savings after migration and support costs.

It is crucial to distinguish between license fees avoided and total cost savings. License fees are only one part of the total cost of software; the rest includes hardware, training, migration, customisation, and ongoing support. A government that saves 58 million in license fees might still spend 20 million on migration and support, making the net saving far smaller.

How Governments Actually Calculate Savings

Public-sector IT managers typically use a Total Cost of Ownership (TCO) model. The TCO includes:

• Software licenses (proprietary) or subscription fees (SaaS).
• Hardware upgrades required by the software.
• Migration costs (data conversion, customisation, testing).
• Training for staff and users.
• Ongoing support and maintenance (in-house or external).
• Opportunity costs (time lost during transition).

When a government claims “we saved 58 million,� it usually means the sum of avoided license fees and reduced support contracts over a multi-year period, not a single year. For instance, a 2015 report from the Italian government estimated savings of €500 million over five years from using open-source software, but that included all public administrations, not just one state.

Why the Actual Savings Vary So Much

The real savings depend on several factors that differ from one state to another:

• Size of the administration – a small state with 10,000 employees will save far less than a large one with 200,000.
• Current software portfolio – if the state already uses a mix of open-source and proprietary, the savings are smaller.
• Negotiated license discounts – large governments often get big discounts from vendors, so the “list priceâ€� is not what they pay.
• Support costs – open-source software is free to acquire, but it still needs professional support, which can cost as much as a proprietary license.
• Migration complexity – moving from a deeply embedded system (like a customised Windows environment) is expensive and can erase license savings for years.

For example, the city of Munich’s LiMux project (2004–2017) was initially touted as saving €10 million per year, but later reports suggested the migration cost more than expected, and the city eventually decided to migrate back to Windows, citing compatibility issues. That shows that the “savings� figure is not stable over time.

Common Misconceptions About Free Software Savings

One common mistake is to assume that “free� means “zero cost.� Free software (as in freedom) often has no license fee, but it still requires skilled personnel to install, configure, and maintain. Another misconception is that all proprietary software can be replaced by an open-source equivalent with no loss of functionality. In practice, some specialised applications (like certain CAD tools or legacy systems) have no viable open-source alternative, so the state must keep paying for those, reducing the overall savings.

Also, the “58 million� figure is sometimes quoted as a gross saving, ignoring the cost of the transition. A more honest figure would subtract the one-time migration costs and the ongoing support contracts. For a state with 10,000 PCs, a realistic migration cost might be $500 to $1,000 per PC, which is $5–10 million in the first year alone.

How to Use the Calculator

This calculator helps you estimate the potential savings for your own organisation, but you must supply the two inputs:

• Current annual license cost – add up all the money you spend on software licenses (not hardware or support) in a year.
• Percentage reduction – estimate how much of that cost would be eliminated by switching to open-source. A realistic range is 50–80% for typical office software, but could be lower if you have specialised tools.

To get a more accurate picture, subtract the cost of migration (one-time) and any new support contracts (annual) from the savings. The calculator only gives the license-cost portion.

Limits of This Calculation

This simple model ignores several real-world factors:

• Migration costs (hardware, staff time, downtime).
• Training costs for employees.
• Ongoing support costs for the open-source software.
• Potential productivity losses during the transition.
• Costs of maintaining dual systems during a phased migration.

Therefore, the result is an upper bound on savings, not a net figure. To get the true net savings, you must subtract these additional costs. For example, if the calculator shows savings of $40.6 million, but migration costs $15 million and new support costs $5 million per year, the net saving in the first year is only $20.6 million, and in subsequent years it is $35.6 million (assuming no further migration costs).

Frequently Asked Questions

Is the 58 million figure real?

No single verified source confirms that any state saves exactly $58 million per year from free software. The number has been used in various reports, but it is often a rough estimate or a gross figure that excludes migration and support costs. Always check the original source and the calculation method.

What is the difference between free software and open-source software?

Free software (as defined by the Free Software Foundation) emphasises the user’s freedom to run, study, modify, and share the software. Open-source software (as defined by the Open Source Initiative) focuses on the practical benefits of access to source code. In practice, most free software is also open-source, but the terms have different philosophical roots. For cost savings, the distinction rarely matters.

Can any government switch to free software?

Technically, yes, but not without exceptions. Some proprietary formats (like certain government databases) may be difficult to migrate. Also, some specialised software (e.g., for tax processing or scientific research) has no open-source equivalent. A realistic migration is gradual, not a big-bang switch.

How long does a migration to free software take?

For a large organisation, a full migration can take 2–5 years, including pilot programs, training, and data conversion. The longer the migration, the more the costs accumulate, which can reduce the net savings in the early years.

Does free software really save money in the long run?

Yes, in many cases, but not always. The savings come from avoiding license fees and from the ability to use the software on older hardware. However, if you need expensive external support or if the open-source software is less efficient, the savings may be small or negative. Each case must be evaluated individually.

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in t | Current annual license cost | USD | 58000000 | 0
in p | Percentage cost reduction from free software | % | 70 | 0
out savings | Estimated annual savings | USD | t * (p / 100) | 0
out new_cost | Estimated new annual cost | USD | t - (t * (p / 100)) | 0